Nepal demands trade pact intact, India eyes review
Nepal demands trade pact intact, India eyes review
KATHMANDU (Reuters): Prime Minister Sher Bahadur Deuba asked New Delhi to keep intact a trade treaty, which allows duty-free access to most Nepali products, but India's visiting foreign minister urged Nepal to tackle concerns over it.
Officials said on Sunday the Nepali leader and Jaswant Singh, the first top Indian official to visit Nepal since Deuba took office last month, discussed late on Saturday the 1996 bilateral trade pact, which is due to expire in December.
Singh also met the new monarch, King Gyanendra, on Sunday but details of the meeting were not disclosed.
"His Majesty the King granted audience to the Indian Foreign Minister Jaswant Singh," a palace spokesman said.
It is customary for visiting dignitaries to meet the monarch but the contents of the talks are not usually revealed. Nepal is a constitutional monarchy.
"Prime Minister Deuba requested the Indian side that the existing framework of the trade treaty should be continued," Foreign Ministry spokesman Gyan Chandra Acharya told Reuters.
But India, the biggest foreign investor in Nepal, believes the pact, due for automatic extension in December, should be reviewed.
Officials said the Indian minister urged Nepal to "accommodate Indian concerns" over the treaty.
"But he has assured that a plan to review it would not go against the basic spirit of the treaty," Acharya said.
The treaty provides duty-free access to unlimited Nepali products into India except alcohol, cosmetic and tobacco to help the impoverished Himalayan nation boost exports.
New Delhi wants the pact reviewed because it says some Nepali products -- hydrogenated vegetable oil, acrylic yarns, copper wire, iron pipes and zinc oxide -- have flooded the Indian market, hurting its industries.
It says some third-country goods were also routed to India, with little value added in Nepal, a charge Kathmandu denies.
Total bilateral trade in 1999/2000 (mid-July to mid-July) was 63.54 billion Nepali rupees (US$846.97 million), more than double the 30.08 billion rupees in 1996/97.
India accounts for 40 percent of Nepal's total trade, and enjoyed a trade surplus with its cash-starved, mountainous neighbor of 18.4 billion Nepali rupees in 1999/2000.
Singh, also the first senior Indian leader to visit Nepal since the June 1 palace massacre in which King Birendra and nine members of the royal family were killed, praised the kingdom for its "forbearance" at the tragedy.
During his meeting with Nepali officials, Singh complained about Nepal being used for anti-India activities.
Muslim militants opposed to the Indian government hijacked an Indian Airlines aircraft leaving Kathmandu for New Delhi in late 1999.
Nepal says it would not allow its land to be used against its giant southern neighbor.
Nepali officials also said an Indian embankment in the northern province of Uttar Pradesh being built near the border to control flood in rivers flowing from Nepal would threaten the site where Buddha, founder of Buddhism, was born over 2,600 years ago.